Yeah, those are dragons. The idea is that Asgard is under siege already. That's why the locals are all aghast. They're pretty used to seeing the floating castle, but not the dragons or the structure being attacked.
I'm thinking about reducing the dragons so they don't draw too much attention, and making the smoke (you can soooooooorta see it in the thumbnails) much much clearer. Googling 9/11 images now. Asgard is already damaged in that second page. Hence the civilian audience. Or maybe I'll omit the dragons altogether and just let the black smoke do its job.
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